Southwest Airlines Co - Balance Sheet
Not what you're looking for?
You have been presented with the following selected information taken from the financial statements of Southwest Airlines Co.
SOUTHWEST AIRLINES CO.
Balance Sheet (partial)
December 31
(in millions)
2004 2003
Total current assets $ 2,172 $ 2,313
Noncurrent assets 9,165 7,565
Total assets $ 11,337 $ 9,878
Current liabilities $ 2,142 $ 1,723
Long-term liabilities 3,671 3,103
Total liabilities 5,813 4,826
Shareholders' equity 5,524 5,052
Total liabilities and shareholders' equity $ 11,337 $ 9,878
Other information:
2004 2003
Net income (loss) $ 313 $ 442
Income tax expense 176 266
Interest expense 88 91
Cash provided by operations 1,157 1,336
Capital expenditures 1,775 1,238
Cash dividends 14 14
Note 8. Leases
The majority of the Company's terminal operations space, as well as 88 aircraft, were under operating leases at December 31, 2004. Future minimum lease payments under non-cancelable operating leases are as follows: 2005, $343,000; 2006, $279,000; 2007, $256,000; 2008, $226,000; 2009, $204,000; after 2009, $1,369,000.
Instructions:
a. Calculate each of the following ratios for 2004 and 2003.
1. Current ratio.
2. Free cash flow.
3. Debt to total assets.
4. Times interest earned ratio.
b. Comment on the trend in ratios.
c. Read the company's note on leases. If the operating leases had instead been accounted for like a purchase, asset and liabilities would increase by approximately $1,500 million. Recalculate the debt to total assets ratio for 2004 in light of this information, and discuss the implications for analysis.
Purchase this Solution
Solution Summary
This solution answers various questions pertaining to a company's balance sheet.
Solution Preview
a. Calculate each of the following ratios for 2004 and 2003.
1 Current ratio.
2 Free cash flow.
3 Debt to total assets.
4 Times interest earned ratio.
b. Comment on the trend in ratios.
c. Read the company's note on leases. If the operating leases had instead been accounted for like a purchase, asset and liabilities would increase by approximately $1,500 million. Recalculate the debt to total assets ratio for 2004 in light of this information, and discuss the implictions for analysis.
CURRENT RATIO= 2004 2003
CURRENT ASSETS/CURRENT ...
Purchase this Solution
Free BrainMass Quizzes
Introduction to Finance
This quiz test introductory finance topics.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.